1.
Actual cost plus a negotiated reimbursement to cover overheads
and profit.
2. Different methods of reimbursement :
Cost + percentage
Cost + fixed fee
Cost + fixed fee + profit-sharing clause.
3. Higher risk to owner,
4. Compromise : Guaranteed Maximum Price (GMP) reduces risk to
owner while maintain advantage of cost plus contract.
5. By using this type of contract the contractor can start work
without a clearly defined project scope, since all costs will be
reimbursed and a profit guaranteed.
1
Fee = percentage of the Disadvantages Advantages
total project cost
No incentive to profitable for the
contractor
finish job quickly
(Cost = $500.000, Fee =
2%) Owner does not
know total price
Larger the cost of
the job, the higher
the fee the owner
pays
2
Disadvantages Advantages
Fee = percentage of the original
estimated total figure:
Expensive Fee
materials and
Utilized on large multi-year
construction
amount is
jobs, fixed
techniques
may regardless
Ex: WW treatment plant be used to
Facility expedite of price
(Cost = $20 million, Fee = 1%), construction fluctuation
Provides
incentive to
complete
the project
quickly
3
Most common form of negotiated contracts,
COST = expenses incurred by the contractor for the
construction of the facility:
Includes: Labor, equipment, materials, and
administrative costs
FEE = compensation for expertise
Includes: profit
4
Rewards contractors Disadvantages Advantages
who minimize cost,
Contractor must Provides
absorb any incentive to
Percentage of cost under the
GMP is considered profit, amount over the contractor to
and shared with the GMP save money
contractor,
Plans & specs.
need to
Guaranteed Maximum
Price (GMP) detailed
% of profit sharing is
specified in contract 5
Variation of this type of contract is called a guaranteed
maximum price (GMP).
In this type of contract the contractor is reimbursed at cost
with an agreed-upon fee up to the GMP, which is essentially a
cap; beyond this point the contractor is responsible for
covering any additional costs within the original project
scope,
An incentive clause, which specifies that the contractor will
receive additional profit for bringing the project in under the
GMP.
6
1. Preparation of contract document.
2. Advertising the tender, tender notice.
3. Submitting Tender by contractor.
4. Study of the tender by owner
5. Clarification regarding conditions or specifications
6. Preparing comparative list
7. Awarding contact
7
Bidding requirements
Notice to Bidders
Instruction to Bidders
Proposal Form
Contract Documents
Contract Forms
Conditions of the Contract
Specifications
Drawings
Addenda (additional item added in order to correct)
Change Orders
Agreement. 8
Construction Documents are defined as the written and graphic
documents prepared or assembled by the A/E for communicating the
design of the project and administering the contract for its
construction.
Two Major Groups:
Bidding Requirements
Used to attract bidders & explains bidding process
Contract Documents
Legally enforceable requirements that become part of the
contract
Include all construction documents except bidding forms 9
10
BIDDING REQUIREMENTS
Bidding Requirements are used to attract bidders and explain the
procedures to be followed in preparing and submitting bids .
Bidding requirements help bidders follow established
procedures and submit bids that will not be disqualified because
of technicalities. They do not become part of the contract
documents
Bidding documents
All of the construction documents issued to bidders before the
signing of an owner-contractor agreement.
11
Documents available to the contractor and on which he must make a
decision to bid or not.
A set of plans and technical specifications, Proposal form,
general conditions, special conditions,
Description of the project to be constructed.
12
It describe:
The scope of the bid,
Source of fund (if it is financed from other agency),
fraudulent (unjustifiable) and fraud practices,
Eligible bidders,
Eligible Materials,
Equipment and Services,
Clarification of Bidding Document,
Site Visit,
Pre-Bid Meeting,
Amendment of Bidding Document
13
Definitions, Engineer’s Authority to Issue Variations, Performance
Security, Inspection of Site, Program to Be Submitted, Cash Flow
Estimate,
Bid Security, Minimum Amount of Third Party Insurance,
Time for Issue of the Notice to Commence, Time for Completion
Amount of Liquidated Damages, Limit of Liquidated Damages
Amount of Bonus for Early Completion, Limit of Bonus
Defects Liability Period, Amount of Interim Payment Certificates
Percentage of Retention, Limit of Retention Money, Amount of Advance
Payment
Start Repayment of Advance Payment, Monthly Recovery of Advance
Payment
Number of Copies of Statement of Completion and Final Statement
Procedure for Settlement of Disputes
Notice to Employer and Engineer
Origin of Materials and Plant, 14
This section contains all the criteria that the
Employer shall use to evaluate bids and qualify
Bidders if the bidding was not preceded by a
prequalification exercise and post qualification is
applied.
In accordance with items specified in ITB, no other
methods, criteria and factors shall be used.
The Bidder shall provide all the information
requested in the forms included in (Bidding Forms)
section..
15
1- Evaluation : describe the Adequacy of
Technical Proposal, in case of Multiple
Contracts, the conditions governs, Completion
Time,
2- Qualification : describe the Eligibility,
financial situation, staff, experience ,
equipments.
16
Letter of bid (bid form)
Form of bid security
Technical proposal forms (personnel,
equipment)
Bidders qualification forms as bidders data,
Historical Contract Non-Performance, Current
Contract Commitments , Historical Financial
Performance, Average Annual Turnover,
General and specific Experience,
17
18
Contract documents (graphic and written) describe the proposed
construction (the ‘Work’) that results from performing services,
furnishing labor, and supplying and incorporating materials and
equipment into the construction:
Contract Forms
Conditions of the Contract
Specifications & BOQ (document providing detailed list of
materials, labor and equipments required for the construction
projects)
Drawings
Addenda
Change Orders
19
20
End of Lecture
21
